Information Frictions and Employee Sorting Between Startups

Kevin Bryan (), Mitchell Hoffman and Amir Sariri

No 30449, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Would workers apply to better firms if they were more informed about firm quality? Collaborating with 26 science-based startups, we create a custom job board and invite business school alumni to apply. The job board randomizes across applicants to show coarse expert ratings of all startups’ science and/or business model quality. Making ratings visible strongly reallocates applications toward higher-rated firms. This reallocation holds restricting to high-quality workers. Treatments operate in part by shifting worker beliefs about firms’ right-tail outcomes. Despite these benefits, workers make post-treatment bets indicating highly overoptimistic beliefs about startup success, suggesting a problem of broader informational deficits.

JEL-codes: M50 M51 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-bec, nep-ent, nep-hrm and nep-lab
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